Correlation Between Bulten AB and New Wave
Can any of the company-specific risk be diversified away by investing in both Bulten AB and New Wave at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bulten AB and New Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bulten AB and New Wave Group, you can compare the effects of market volatilities on Bulten AB and New Wave and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bulten AB with a short position of New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bulten AB and New Wave.
Diversification Opportunities for Bulten AB and New Wave
Modest diversification
The 3 months correlation between Bulten and New is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bulten AB and New Wave Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Group and Bulten AB is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bulten AB are associated (or correlated) with New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Group has no effect on the direction of Bulten AB i.e., Bulten AB and New Wave go up and down completely randomly.
Pair Corralation between Bulten AB and New Wave
Assuming the 90 days trading horizon Bulten AB is expected to generate 0.72 times more return on investment than New Wave. However, Bulten AB is 1.39 times less risky than New Wave. It trades about -0.06 of its potential returns per unit of risk. New Wave Group is currently generating about -0.26 per unit of risk. If you would invest 6,970 in Bulten AB on August 30, 2024 and sell it today you would lose (200.00) from holding Bulten AB or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bulten AB vs. New Wave Group
Performance |
| Timeline |
| Bulten AB |
| New Wave Group |
Bulten AB and New Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bulten AB and New Wave
The main advantage of trading using opposite Bulten AB and New Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bulten AB position performs unexpectedly, New Wave can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in New Wave will offset losses from the drop in New Wave's long position.| Bulten AB vs. Inwido AB | Bulten AB vs. Clas Ohlson AB | Bulten AB vs. Bufab Holding AB | Bulten AB vs. Byggmax Group AB |
| New Wave vs. Telefonaktiebolaget LM Ericsson | New Wave vs. Swedbank AB | New Wave vs. AB Electrolux | New Wave vs. Investor AB ser |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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